Economic Valuation of Environmental Flows in Texas, USA

Water is unique among natural resources in the wide variety of allocations: human use and environmental use; direct use/market-good and non-use/non-market good; and as a private good and a public good. Environmental flows are essential for estuary and bay ecosystems, but come with tradeoffs and/or externalities associated with use allocation. The State of Texas has recognized the importance of environmental flows for the heath of its bays and estuaries and has enacted legislative actions. Regulatory and market-based strategies have been implemented for the allocation of water resources as a private good. This paper looks at how economic impacts and values can be estimated for water resources allocated for environmental flows as related to Texas water policy, uses case studies to demonstrate examples of how dollar values can be estimated, and describes how value and costs can be estimated using various methods.